Lululemon Athletica: Analyst Maintains Hold Rating Amid Uncertainty in Sales Turnaround and Fair Valuation

Morgan Stanley analyst Alexandra Straton maintains a Hold rating on Lululemon Athletica with a $223 price target. She cites uncertainty around the company's sales turnaround in the Americas and a fair valuation. While profitability is expected to be better-than-expected, it may not be enough to drive a positive re-rating. Straton anticipates potential underperformance in Q2 2025 and a stagnant or worsening sales trend in the Americas, leading her to maintain a Hold rating.

In the latest market developments, Lululemon Athletica (LULU) has seen a mixed response from analysts, with some maintaining cautious optimism while others express concern over potential underperformance. Morgan Stanley analyst Alexandra Straton has maintained a Hold rating on the stock, citing uncertainty around the company's sales turnaround in the Americas and a fair valuation. Despite expected profitability, Straton anticipates potential underperformance in Q2 2025 and a stagnant or worsening sales trend in the Americas, leading her to maintain her Hold rating [1].

Lululemon Athletica reported a 7.3% year-over-year revenue increase in its recent earnings report, with an EPS of $2.60 meeting analyst expectations. However, the stock has seen a decline of 2.42% in the latest close session, lagging behind the S&P 500's daily loss of 0.43% [1]. The company's stock has been trading at a Forward P/E ratio of 14.47, which is a discount compared to its industry average Forward P/E of 16.08. The PEG ratio of 1.78 further indicates a relatively undervalued stock compared to its industry peers [1].

Institutional investors have shown increased interest in Lululemon Athletica. Norinchukin Bank, for instance, boosted its holdings by 43.7% in the first quarter, owning 9,497 shares valued at approximately $2.69 million. Other institutional investors such as Vanguard Group Inc., Price T Rowe Associates Inc., Flossbach Von Storch SE, Invesco Ltd., and American Century Companies Inc. have also increased their stakes in the company [2].

Despite the mixed analyst sentiments, the stock has been performing well in terms of valuation metrics. Lululemon Athletica has a market capitalization of $24.88 billion, a price-to-earnings ratio of 14.06, a PEG ratio of 1.69, and a beta of 1.16. The stock has a fifty-two week low of $185.95 and a fifty-two week high of $423.32 [2].

The upcoming earnings release of Lululemon Athletica on September 4, 2025, is expected to be of great interest to investors. The company is anticipated to report an EPS of $2.85, marking a 9.52% fall compared to the same quarter of the previous year. The Zacks Consensus Estimates forecast earnings of $14.35 per share and revenue of $11.18 billion for the entire year, indicating changes of -1.98% and +5.58%, respectively, compared to the previous year [1].

In conclusion, while Lululemon Athletica faces uncertainty and potential underperformance in the near term, the stock remains attractive due to its valuation metrics and institutional investor interest. Investors should closely monitor the company's earnings report and analyst revisions to gauge the potential impact on the stock price.

References:
[1] https://finance.yahoo.com/news/lululemon-lulu-dips-more-broader-214502069.html
[2] https://www.marketbeat.com/instant-alerts/filing-norinchukin-bank-the-increases-position-in-lululemon-athletica-inc-lulu-2025-08-23/